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Commodities Energy

Oil and natural gas daily review (January 08, 2014)

January 8, 2014, Wednesday, 07:23 GMT | 03:23 EST | 12:53 IST | 15:23 SGT
Contributed by Angel Broking

Crude Oil
Nymex crude oil prices gained around 0.3 percent yesterday on the back of sharp decline in API crude oil inventories. Further, expectations of rise in demand for the fuel after favorable economic data from the US and Euro Zone supported an upside in the prices.
However, sharp upside in the currency was capped due to strength in the DX. Crude oil prices touched an intra-day high of $94.22/bbl and closed at $93.90/bbl in yesterday’s trading session.
On the domestic bourses, prices rose by 0.2 percent and closed at Rs.5856/bbl after touching an intra-day high of Rs.5879/bbl on Tuesday. Appreciation in the Rupee restricted sharp positive movement in the prices on the MCX.
API Inventories Data
As per the American Petroleum Institute (API) report last night, US crude oil inventories declined sharply by 7.3 million barrels to 354.50 million barrels for the week ending on 3rd January 2014. Gasoline inventories rose by 5.6 million barrels to 228.38 million barrels and whereas distillate inventories gained by 5.2 million barrels to 122.20 million barrels for the same week.
EIA Inventories Forecast
The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 9:00pm IST and US crude oil inventories is expected to fall by 0.9 million barrels for the week ending on 3rd January 2013. Gasoline stocks are expected to gain by 2.3 million barrels whereas distillate inventories are expected to surge by 1.9 million barrels for the same period.
From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of expectations of fall in US crude oil inventories which will support an upside in the prices. Further, more than expected decline in API crude oil inventories in yesterday’s trade along with upbeat market sentiments will act as a positive factor. Additionally, forecast for favorable economic data from Euro Zone will continue with positive movement in oil prices. While on the other hand, sharp rise in gasoline and distillate inventories in yesterday’s trade from API and estimates of rise in same by the EIA will add downside pressure on the prices. Also, strength in the DX coupled with forecast for decline in non-farm employment data from the US in the evening session will act as a negative factor. In the Indian markets, Rupee appreciation will add downside pressure on the prices.